xm create is not supposed to create any files. It is the command to start an already defined virtual machine. Your iso file would be presented as a block device, as would the blank, empty (I assume) boot disk, but you must create the networking, disks and cdroms beforehand. This is usually done with the OVM Manager.

I'm trying to get a Oracle Linux 6.3 Virtual machine.
Reason why I need a virtual machine is because of CPU capping to meet lincing demands.

On this OL6 I'll install Oracle RDBMS 11gR2 RAC.

So it would be my ISO, who expects these files?
Because the same messages are logged when trying to open a console.

The domain ID keeps changing, so the required dir, needs to created everytime too.. but which process would do this?

xm needs to do it's administration. Does this happen in allready existing files?

I've tried with a img file and with a raw device (last partition not mounted.

[root@OVS-PRI xen]# fdisk /dev/sda

The number of cylinders for this disk is set to 345652.
There is nothing wrong with that, but this is larger than 1024,
and could in certain setups cause problems with:
1) software that runs at boot time (e.g., old versions of LILO)
2) booting and partitioning software from other OSs
(e.g., DOS FDISK, OS/2 FDISK)